Blockchain Interchange System with Biometric Token Authentication
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Current financial transaction systems, such as ACH and SWIFT, are costly, cumbersome, and overly reliant on third parties, making them unsuitable for the modern online economy, with high transaction fees and overhead costs due to the need for centralized security measures.
Innovation Solution
A blockchain-based interchange system that employs a token device with biometric authentication for secure, real-time transactions, eliminating the need for centralized banks and reducing reliance on third parties by using a decentralized ledger for settlement and verification.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If centralized bank systems (ACH, SWIFT) are used for settlement, then transaction security is maintained through centralized control, but transaction costs increase due to third-party fees and overhead
Solution Approach 1:
The patent extracts the settlement function from centralized banks and implements it through a distributed ledger network. Each participant maintains their own ledger copy, eliminating the need for intermediary clearinghouses and reducing third-party fees while maintaining security through cryptographic verification.
Solution Approach 2:
The system enables financial institutions to perform settlement autonomously through automated smart contracts on the distributed ledger. The network self-verifies transactions through consensus mechanisms, eliminating manual reconciliation processes and reducing operational overhead costs.
2Reliability
If centralized third parties are used for payment verification, then transaction authenticity is ensured, but system complexity increases due to multiple intermediaries
Solution Approach 1:
The patent removes intermediary verification layers and replaces them with direct peer-to-peer verification through the distributed ledger. Each node independently validates transactions using cryptographic proofs, simplifying the system architecture by eliminating centralized clearinghouses and correspondent banks.
Solution Approach 2:
The distributed ledger network provides a universal verification mechanism that all participants can use directly. The same ledger serves as the source of truth for all institutions, replacing multiple institution-specific verification systems and reducing overall system complexity.
3Measurement precision
If batch settlement processes are used, then processing accuracy is maintained through centralized control, but settlement time increases due to delayed fund transfer
Solution Approach 1:
The system performs preliminary verification of transaction validity through smart contract validation before settlement. Automated checks for sufficient funds, authorized signatories, and compliance rules are executed in real-time, ensuring accuracy is maintained while enabling immediate settlement without batch processing delays.
Solution Approach 2:
The patent transitions from static batch settlement to dynamic real-time settlement. The distributed ledger continuously updates transaction states and automatically reconciles accounts as transactions occur, maintaining accuracy through ongoing verification rather than periodic batch processing.
Data Source
AI summary
A portable token device is described, the token device useable to request transactions performed over an interchange system. The token device authenticates a user through the use of biometric data such as a fingerprint. When in proximity to a point of sale (POS) terminal, the token device communicates with the POS terminal over a wireless network to authorize a transaction involving the user. The interchange system employs blockchain elements that can be used in a payment apparatus for managing payments or other types of transactions, and for managing user accounts. The interchange system enables users to enroll in the system, and enables the various users' computing devices to be used as confirmation centers for new transactions and/or funds transfers between users.